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02/23/2021 03:00 PMThe Board of Finance is discussing dipping into a projected, significant surplus in the town’s unassigned fund balance to address some short-term needs, with officials eying around $2.5 million in expenses that range from replacing Public Works Department vehicles to starting a trust for retirement benefits.
Finance Director Stacy Nobitz laid out the projections for the surplus, which, depending on how the BOF chooses to define how to maintain the fund balance, could be anywhere from $4 to almost $9 million.
Currently, the BOF regulations state the unassigned fund balance should be 10 percent of the total budget, minus debt service payments, according to Nobitz. Using that metric, the town is projecting an $8.9 million in surplus.
But the town’s bond consultant, credit rating agency, and auditors have all recommended a higher reserve level, holding two months of the yearly operating budget in unassigned fund balance, according to Nobitz.
That more “conservative approach” would still leave the town with an approximately $4 million surplus this year, she said, and officials including BOF Chair Jean Fitzgerald expressed the desire to put some of this money toward what they characterized as relatively urgent needs.
Fitzgerald clarified that she did not want to officially alter the 10 percent regulation, but that the BOF “can make any decision we want” as far as saving more money, as it looks toward an infusion in a handful of projects.
Additionally, the BOF is still considering applying $673,000 from the unassigned fund balance to next year’s budget, to help offset tax increases, bringing the total amount drawn from the fund to about $3.1 million.
Fitzgerald and BOF members noted that items on the list were not set in stone, and they would be working with the Board of Selectmen (BOS) to determine priority expenditures.
The items under consideration include $300,000 for a coastal resiliency fund, $150,000 for a sewer study for downtown, $600,000 to purchase three dump trucks, and a $1 million investment in an Other Postemployment Benefits (OPEB) trust fund that would serve as a long-term investment in benefits for retired town employees.
An outside study of Public Works Department vehicles last month concluded that much of its equipment was in various states of disrepair, with the consultant even questioning the road-worthiness of some trucks. The three trucks, at $200,000 each, were rated as a priority by Town Engineer John Ianacco.
BOF member Justin Murphy worried that dropping more than half a million on trucks could end up being an every-decade expense, as all three new trucks would end up being a “recurring lump” as those trucks in turn reached the end of their lives.
Fitzgerald agreed but added the town could put together a savings plan to make sure they are prepared for those replacements.
First Selectman Peggy Lyons said that a more comprehensive solution to the vehicle issue, totaling about $1.9 million in costs and replacements according to the study, was currently being evaluated by town officials.
Lyons also said town officials are hoping for some additional reimbursements from the federal government on previous special appropriation expenses, which could nudge the excess balance of the unassigned fund higher.
Fitzgerald and Nobitz agreed that BOF members should have a chance to ask questions about the OPEB fund, with a tentative plan to have the town’s actuary present at their next meeting. While creating the fund would potentially remove an annual line item from the budget, it would also require some kind of annual contribution, according to Nobitz, with actuaries best suited to providing specifics.